Section 125.203. Requirements for conducting business with identity of interest vendors.

Owners and management agents shall conform  to  all  of  the following requirements when conducting business  with  vendors   with  whom there is an identity of interest:

(a)   Both the owner and  management   agent  shall  inform   the   authority division of management and reinvestment of any proposed vendor with whom there is an identity of interest. Such  notification   shall  be   submitted concurrent with submission of the development  operating  budget,  but   at least once per year.

(b)   The owner and management agent shall submit a certified disclosure for each proposed vendor with whom there is an identity of interest which lists the names of all of the following persons:

(i)   All owners and managers of vendors that are sole proprietorships.

(ii)     All copartners or  general  partners  of  vendors  that  are copartnerships or limited partnerships.

(iii)   All joint venturers of vendors that are joint ventures.

(iv)   All directors, officers, and shareholders   of  vendors  that  are corporations.

(c)  The certified disclosure shall list, for  each  person  described    in subdivision (b) of this rule the names of the individuals  involved  with the owner or management agent with whom there is an identity of interest and the extent or degree of such identity  of   interest.  The   certified disclosure shall also contain other information  as the   authority  shall require, such as the following:

(i)   Federal tax identification number of all vendors with whom there is identity of interest.

(ii)   The location of all offices that contain business records of the vendors with whom there is an identity of interest.

(iii)   The names and addresses of the bookkeepers and accountants of the vendors with whom there is an identity of interest.

(d)  The certified disclosure shall be submitted on such form as shall  be designated by the authority and shall be submitted together with the submission described in subdivision (a) of this rule or, if the proposed vendor is not listed on such submission, at the time  the   owner  or

management agent requests approval to contract with a proposed vendor with whom there is an identity of interest.

(e)   The owner and management agent shall submit, together with its certified disclosure, a copy of the organizational documents for each proposed vendor with whom an identity of interest is shared.

(f)  The authority shall have the right to audit the books of the vendor with whom there is an identity of interest to determine whether amounts paid to identity of interest vendors were reasonable and whether there has been compliance with applicable restrictions on  return.  The  owner, management agent, and proposed vendor shall acknowledge the authority's right to conduct such an audit in the certified disclosure.

(g)   Both the owner and management agent shall submit, to the authority, a request for approval to use a proposed vendor with whom there is an identity of interest. Neither the  owner  nor  management  agent  shall contract for goods or services from any vendor with  whom  there  is  an identity of interest until the proposed  vendor and contract  amount  is approved by the authority. If  an  owner  or  management agent enters a contract for goods or services beyond the goods  or  services previously approved by the authority, or if the contract price increases beyond the prices previously approved by the authority, then an additional approval shall be obtained.

(h)  The authority may, upon a request from the owner or management agent and after review of the disclosure   required  pursuant   to  the  provisions  of subdivisions (b) to (f) of this  rule,  determine   that   the   identity   of interest  between  the  owner  and  agent

is  insignificant.    If    such     a determination is made, the owner and management agent need not comply with the provisions of subdivision (i) of this rule.

(i)   Unless compliance with this subdivision is  excused  pursuant  to   the provisions of subdivision (h) of this rule, all requests for approval of proposed vendors shall be accompanied by a detailed explanation of the goods or services to be provided by the proposed vendor and not less than 3 bids for such goods and services. The 3 bids shall include a bid  from  the vendor with whom there is an identity of interest.

(j)   Requests for approval of a  proposed  vendor   shall  be  submitted concurrent with the submission of the development operating budget and any other time that the owner or management agent wishes to contract with a vendor with whom there is an identity of interest. However, a proposed vendor and contract amount need be approved only 1 time per operating year per development, unless the vendor supplies goods or  services  beyond  the goods or services previously approved by the  authority or  the  contract price increases beyond the prices previously approved by the authority.

History: 1991 AACS.